Economy

In 2007 and 2008, government tax revenues averaged about $633.15 billion per quarter. For the first quarter of 2009, however, the numbers just in tell us that tax receipts totaled only about $442.39 billion -- a decline of 30%.

Looking to confirm the trend, we compared the data for April – the big kahuna of tax collection months – to the 2007-2008 average, and found that individual income taxes this year were down more than 40%. The situation is even worse for corporate income taxes, which were down a stunning 67%! [emphasis mine]

When you add in all revenue from all sources (including Social Security revenue, government fees, etc.), the fiscal year-to-date – October through April – revenue shortfall comes to 19%, vs. the 14.6% projected in Obama’s budget. If, however, the accelerating shortfall apparent year-to-date, and in April in particular, continues, the spread between projected and actual tax receipts will widen considerably.

What are the implications of this tanking tax revenue?

For starters, it means the federal government deficit is going be as bad or worse than the $2.5 trillion Bud Conrad, chief economist of Casey Research, projected it to be last year.

If the shortfall in individual and corporate tax revenue persists -- and we expect it will -- then the deep hole the government is already digging for itself will be that much deeper. ...

Yet, the real fly in the ointment is that the actual borrowing by the Treasury is likely to be at least half a trillion dollars more than the deficit.

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil’s central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

“Currency swaps are not necessarily trade related,” the official said. “The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi.”

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries’ central banks, were expected to meet soon to discuss the matter, the official said.

Mr Zhou recently proposed replacing the US dollar as the world’s leading currency with a new international reserve currency, possibly in the form of special drawing rights (SDRs), a unit of account used by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Mr Zhou said the goal would be to create a reserve currency “that is disconnected from individual nations”.

The euro's share in Russia's forex reserves, the world's third-largest, overtook that of the dollar last year as the country pressed on with a gradual diversification, the Central Bank's annual report showed.

The euro's share increased to 47.5 percent as of Jan. 1 from 42.4 percent a year ago, according to the report, which was submitted to the State Duma on Monday.

The dollar's share fell to 41.5 percent from 47 percent at the start of 2008 and 49 percent at the start of 2007.

As Brad points out:

It is often asserted that the dollar is the global reserve currency. It would be more accurate to say the dollar is the globe’s leading reserve currency.* The dollar is the dominant reserve currency in Northeast Asia. And the two big economies of Northeast Asia both happen to both hold far more reserves than either really needs. The dollar is also the reserve currency of the Gulf. And Latin America.**

But the dollar isn’t the dominant reserve currency along the periphery of the eurozone. Most European countries that aren’t part of the euro area now keep most of their reserves in euros. That makes sense. Most trade far more with Europe than the US – and some, especially in Eastern Europe, ultimately want to join the eurozone.

SÃO PAULO -- Brazil's oil industry is turning to China for cash in the latest sign of how Beijing's clout is growing amid the global economic downturn.

Brazilian President Luiz Inácio Lula da Silva was set to arrive in Beijing Monday to meet with Chinese President Hu Jintao, who is expected to unleash billions of dollars of credit to help Brazil exploit its massive oil reserves. Brazil will return the favor by guaranteeing oil shipments to Chinese companies.

The nations are being thrust together by the global financial crisis. Brazil's state-controlled oil giant, Petroleo Brasileiro SA, wants to spend $174 billion over the next five years to elevate Brazil into the major leagues of oil-producing nations. With international capital markets on life support, China is among the few remaining sources of cash.

Petrobras, as the company is known, is turning to China at a time when China's appetite for raw materials has lifted economies across commodity-rich Latin America, blunting the impact of the global downturn. In March, China passed the U.S. as Brazil's biggest trade partner.

Vincent Farrell, Jr. is Chief Investment Officer of Soleil Securities, a New York based investment management company. Over his long career on Wall Street, he has worked for numerous distinguished firms. Mr. Farrell graduated from Princeton University in 1969 and received his M.B.A. from the Iona College Graduate School of Business in 1972.

I have never bought a car in my life. My wife has bought a lot of them. I’m just not that into cars. I have usually referred to the cars we own by their color. I’m taking the blue car or the gray car or whatever. I actually did lease a car once. Back in the heady days of Spears, Benzak, Salomon, and Farrell, we all leased fancy cars and took advantage of the tax code provisions. But I even faded on that one a bit by going to the dealership with one of my partners and leasing the same car he did.

My most recent car was a Ford Escape (I had to ask — I thought of it as the dark gray car) with close to 100,000 miles on it. We swapped it and another we had no more need for since the kids are grown and gone, and I (we) got another SUV. It’s gray and American-made, and that’s as much as I know about it. The neat thing is it came loaded with XM satellite radio so I can now listen addictively to CNBC as well as addictively watch it. But only after Ken Prewitt and Tom Keene on Bloomberg radio. (They are the best.) I’m pretty sure we got XM for a year for free, as the dealer was desperate, or so my wife told me. If I get a bill though, XM is history.

We probably should have waited since my old car, which was fine by me, was a “clunker” and probably would have qualified for the “cash-for-clunkers” program soon to come out of Congress. Germany has registered a significant increase in new-car registrations since their program went into effect. Word from Britain is that, on the verge of their program being enacted, activity in showrooms is up substantially.

The U.S. House of Representatives has passed a plan and the Senate is likely to do the same this week. It looks like the plan would provide a $3500 subsidy to anyone trading in a car getting less than 18 miles per gallon as long as there is at least a 4-mpg improvement. (I think I got yardage on my old car, not mileage.) A 10-mpg improvement would get you another $1000.

So the car industry would be revitalized - at least a bit - and the environment would be aided. Here’s the hitch. Of the 9 or 10 most fuel-efficient vehicles being sold today - and presumably the beneficiaries of such a program - four are built by Toyota, two by Volkswagen, one by Honda, one by Smart (never heard of that? it’s a Swiss-designed, Mercedes-owned, French produced mini-car) and one by a US-based company: Ford. Some of the others might be made on US soil, I don’t know. But is this really what we wanted to do?

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”
This seems unlikely (reviving annual fees, charging immediate interest) because of competition. At least I hope it is unlikely!

For those of you who know the Myser-Briggs personality diagnostic, it defines 16 types by establishing four attributes, of which an individual can be either A or B. Some are pretty obvious: extroverted versus introverted, thinking versus feeling. One is called "sensing versus intuitive." Sensing people are literal-minded, while intuitives are imaginative.

The last type is judging versus perceiving. Judging types like making decisions; while perceiving types feel a sense of regret and want to keep options open and collect more information.

when Geithner delivered his first version of a financial services industry plan, which was notable for NOT being a plan and lead to a negative stock market reaction, I suspected Geithner was a perceiving type (and that type is tot a natural fit with an executive role). This WaPo article provides some evidence to corroborate that theory. Perhaps as important, the fact that this story even ran suggests staff are grumbling loudly enough for the WaPo to get wind of it.

The story is noteworthy in other ways. It suggests that Summers has considerable sway (duh!) and the PPIP has been delayed (it was supposed to be running by now) due supposedly to failure to work out certain details, I wonder if they are coming to realize that leverage will still not induce investors to enter into asset purchases with a negative expected net present value.

From the Washington Post (hat tip reader Larry):

While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren't being made.....

Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department's top ranks. But some of the officials also cite the Treasury's ad-hoc management, which is dominated by a small band of Geithner's counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.

The time-tested buy-and-hold investment mantra has become so unpopular that even those who advocate the strategy don’t refer to it by that name anymore.

Now terms like “buy and harvest” and “buy and trade” have replaced the old “buy and forget” philosophy once so popular among active stock market investors.

The change reflects a spreading attitude that in an age of 24/7 financial news and information, which can mean tremendous volatility, it no longer makes sense to buy a stock and then check back on its performance five, seven or ten years later.

And so it begins. Rep. Alan Grayson has distributed the letter below to all Democrats in the House and will use it to generate Democratic co-sponsorship for the HR1207 Bill, aka The Federal Reserve Transparency Act, allowing the GAO to audit the Federal Reserve, and also require a Fed report to Congress by the end of 2010.

This is the critical first step for U.S. Taxpayers to regain some semblance of control over the insanity that happens each and every day over at the Federal Reserve. The status quo must change.

A simple prediction: The United States Congress will NEVER pass legislation that holds the Fed Res accountable because our elected representatives are totally under the control of the wealthy/elite who control the Fed and control the major corporations who have adequate representation throughout the Fed system. They have the power. We do not. They have the real money. We do not. And, as long as there are enough people who are willing to sell their vote for personal gain, nothing will change, except, of course, that we will continue down this raceway toward financial ruin for the working class, and more power for the wealthy/elite.

Oh, and IF by some rare circumstance Fed Res accountability should pass, look for it to be so watered down that its enforceability will be meaningless.

I believe that HR 1207 is up to 175 (out of 218 required) cosponsors in the House. Lately, it has been adding 5 new people per day. Many people have been very skeptical that this act will never get through the senate or past the Prez, but I view the situation a little differently.Two years ago, I don't know of any politicians other than Ron Paul and Dennis Kucinich that demonstrated they had a clue about the reality of the Federal Reserve. Today, 40% of the House of Representatives has formally supported a bill demanding disclosure.

I am not one to be complacent, but I am happy to see that more and more people are starting to care about this issue and that is being reflected in our politicians. The cosponsor list includes about 25 Democrats in addition to a slew of Republicans. Lately, the bill has received a good bit of attention on Fox News. If this continues, I think (hope??) that even if the bill fails, whoever shoots it down is going to need to justify their actions in some way and will come under fire for not supporting transparency. In my assessment, conflict is actually helpful because it will generate more news and awaken more people to what is going on.

Sounds like more of the Ayn Rand nonsense -- and a lot of the logic that brought us to where we are. In my opinion, the idea that it is appropriate to do anything that is profitable without regard to the consequences of ones actions is ridiculous to say the least. More ivory tower theory about free enterprise that ultimately brings us to the level of continuous tribal warfare. Common sense must be brought into the equation and saving $12 to install unsafe fuel tanks is not using common sense any more than the people at AIG, Goldman etc etc have used common sense. Taught at the best of our Universities, but overlooks the basic logic/sense that our grandmothers would have put forward.

I agreed with Friedman as far as he went, on a purely financial level. However the main point, as far as I am concerned, and which got a bit lost in the ensuing to and fro, is that of knowledge or (dare I say it, as the two do not mean the same thing!) information. If I know that the Pinto (for example) has a fuel tank that will make it liable to do certain things in a shunt, I can base my purchasing decision based on that knowledge. If that information is withheld (or not made public) I can't make a completely reasoned purchase.

In fact, I have recently bought a car where the handling characteristics are very slightly different to a similar vehicle (slight oversteer versus understeer if anyone's interested!) and this was among my decision choices.

The same applies to what's happening with our economies. If the detail of what is ACTUALLY going on is obfuscated or withheld we are unable to be certain of what is really going on. Hence the value of arenas such as Chris's.

I'm also aware of the fact that if 'everybody else is buying a Pinto despite its fuel tank fault' or 'everybody is buying the market despite all the information indicating otherwise' it does mean that sometimes we have to observe rather than participating!

Milton Friedman is maddening. Even if you accept, as he seemed to have, that everything has an explicit monetary value, and that the court system knows what that value is and is empowered to impose fines, what power can force a violator to pay the fine? What if he chooses not to? What if he simply doesn't have the money to pay the fine? If a company does $5 million of damage in the process of making $1 million in profit, how can it possibly counter the damage it has already caused? It can't. So what's to stop companies/people from repeatedly causing destruction to others (especially when combined with the bizarre concept of a limited liability corporation)? Market forces? Yeah, right. Friedman's ideas are simply a flawed, theoretical justification for taking as much as you can before someone else takes it. Greed.

Unregulated, or poorly regulated, capitalism is so clearly a destructive system that I am baffled when people try to defend it. Yes, it can have the appearance of working for awhile, but eventually it hits a limit when somebody cuts one too many forests, or sucks up too much ground water, or dumps too many pesticides in the ocean. Once a tipping point has been reached, no after-the-fact justice system can tip us back. And there will never exist a market that has perfect enough information to know exactly where that tipping point is and be able to turn back from it in time.

The Earth we live on is a self-regulating system that is constantly acting and reacting to maintain balance. I don't know of any evidence that human beings living comfortably on Earth is necessary. I believe it is up to humans themselves to make sure they maintain a place in this balanced system. In my opinion, no small part of that maintenance involves striking a balance between self-interest and the interest of others.

If I understand "Friedman-Chicago Boys" style economics, there are a couple of basic flaws that must not be overlooked.

First, in a "profit and nothing else" system, those who make the profit NEVER pay the full price for what they use up in making their profits. So, either the general public or the earth itself winds up paying for part of their "raw materials."

Secondly, Friedman types would have us believe that people should be kind and generous enough to take care of all situations on the earth that pertain to those less fortunate. As one explained to me so forcefully recently, "If I, as a Christian, want to take money out of my pocket and give it to someone whom I see in need that's one thing. But if the government takes it from me and gives it to that same person in need, that's just plain wrong."

The assumption, of course, is that we human beings will always be so kind and generous, while living under capitalistic systems, that we will individually take good care of anyone, and everyone, who has "fallen through the cracks" of society and needs help. The truth is, however, that there are just not enough of us like that. So, we wind up with a society where some are, for various reasons, fabulously well off; others of us are moderately well off, and some, for a variety of reasons, are eating out of dumpsters and living under bridges.

These theories are interesting. But if we truly understand that none of us can truly have well being unless all of us have some measure of well being, then it seems to me that a society that truly directs its own government, must choose to do some things collectively for each other.

Net income declined to $1.8 million, or 1 cent per American depositary receipt, from $46.7 million, or 30 cents, a year earlier, Wuxi, China-based Suntech said today in a statement. The company was expected to lose 6 cents a share, the average of 13 analyst estimates compiled by Bloomberg. Sales dropped 27 percent to $315.7 million.

Chief Executive Officer Zhengrong Shi fired 800 workers in January, slashed production goals and delayed a plan to expand capacity in China to weather the slump in sales and conserve cash. Last week, he said Suntech will build a factory in the U.S. to take advantage of new state and federal tax and manufacturing incentives.

“It was a pretty miserable quarter,” said John Hardy, an analyst at Broadpoint Amtech in Greenwich, Connecticut, who has a “neutral” rating on Suntech shares and owns none. “Demand for quality modules like Suntech’s will pick up in the second half and they should start to benefit from their U.S. expansion.”

WSJ reports that the economic recovery may yet tarry, and oil demand is still anemic, but there might be a solid reason crude oil has perched above $60 a barrel. Energy analysts at Sanford Bernstein say eye-in-the-sky satellite images from Google show the Chinese are packing away a rising amount of crude in storage tanks. "Our analysis confirms that tanker capacity arrivals into China have spiked up in recent months, in line with imports, but more importantly, tanker arrivals into Strategic Petroleum Reserve ports have increased materially," Bernstein says Friday in a research report. Just as satellite imaging has helped fuel debate over the true state of oil supplies—especially in Saudi Arabia—the new technology promises to give oil-market watchers a chance to crack the demand side of the puzzle too. Bernstein estimates that the amount of crude entering the SPR ports in China—the world's second biggest oil consumer after the U.S.--has increased by around 400,000 barrels a day since November, based on its assessment using the satellite imaging services of Google, the search engine company... Bernstein says satellite images show a marked increase in oil-storage construction over the past few years and estimates that China's number of days of forward demand--a gauge of oil storage--amount to just 28 days of imports and 14 days of total demand. China is targeting storage capacity that will hold demand cover of around 90 days.

Jobless claims have peaked, says a member of the bureau charged with declaring when US recessions begin and end. And in every recession since 1974, the peak in jobless claims has come within weeks of the bottom.

When will this horrible recession be over? According to one surprising source, it's over right now.

The source is Robert J. Gordon, an acclaimed macroeconomist and professor at Northwestern University. It's surprising to learn he thinks the recession is over, because he is one of seven members of the elite Business Cycle Dating Committee of the National Bureau of Economic Analysis. These are the people who decide officially, for the record books, when recessions begin and end -- usually many months after the fact, when the decision is really obvious. I'm unaware of any previous case in which a member of this committee has stepped forward and declared the end of a recession in real time.

Gordon bases his gutsy call on an indicator that he says the committee never even looks at: claims for unemployment benefits. He's talking about the so-called jobless claims number that is released every Thursday morning before the market opens.

Based on detailed data from state agencies, it reports the number of workers who have asked for unemployment benefits in the previous week. As Gordon points out, there is no other major macroeconomic statistics that comes out so frequently and so close to real time.

According to Gordon's research, in every recession since 1974, the peak in jobless claims came within weeks of the bottom of the recession.

This is a remarkable research result, in my opinion. I was impressed a year ago when economist Edward Leamer of UCLA wrote a paper that accurately explained recession timing with just three variables -- the unemployment rate, total payroll jobs and industrial production. But Gordon has done Leamer two better. Gordon has it down to a single variable: claims. And because claims data are available nearly immediately, investors can use Gordon's insight to make actual trading decisions.

Claims are typically reported as a four-week moving average, to smooth out some of the random noise from week to week. All Gordon has done, really, is to make the simple observation that the peak in the four-week moving average coincides perfectly with the ends of recessions. I charted the data to prove it to myself, and he's right. Here it is:

One thing jumps out of the chart that has nothing to do with Gordon's indicator -- the fact that in this recession, we still haven't exceeded the number of claims in the 1981-82 recession.

As bad as it seems today, we've lived through worse, and not all that long ago. It was a lot worse in 1981-82, too, because the size of the work force was smaller then. So the same number of claims represents a larger percentage. Adjusted for the size of the work force, today's claims are just a little more than half of what they were at the 1982 peak.

Now let's ask a tough question about Gordon's indicator. How do you really know when there has been a "peak" in claims? Just because the four-week moving average turns down for a couple weeks, how do we know it won't just turn up again and go to new highs?

Gordon himself takes on this criticism. Writing more than two weeks ago, when the four-week moving average was already 3.1% off its early April peak, he noted that the pattern of the decline in magnitude and timing nearly perfectly matched all the previous instances in which no subsequent higher peak developed.

So far he's right. Looking at the data as of May 14, the four-week moving average of claims (pre-adjustment) was down 4.3%, so the early April reading is looking more and more like a real peak. (The Labor Department on Thursday said the number of newly laid-off Americans requesting unemployment insurance dropped slightly last week after spiking due to auto layoffs.)

The weekly claims data released May 14 did show a modest rise in the number of claims after two weeks of declines, causing the four-week moving average to tick higher. That's no reason to throw out Gordon's big idea. No one expects numbers like this to move only in one direction week after week. A smart investor always looks for what might go wrong.

Claims jumped two weeks ago as Chrysler shut factories after filing for bankruptcy, an event that brings up an unpleasant memory -- a memory of the one time Gordon's indicator got it wrong.

Take a look at the chart again. Note the recession of 1969-1970, in which a seeming peak in claims was then followed by another peak -- not a higher peak, but enough to delay the end of the recession. According to Gordon, this second peak was caused by a bitter strike at General Motors, which lasted 67 grueling days. Gordon says, "This was a big deal at the time when GM had a 50% share of the U.S. automobile market and 400,000 members of the United Auto Workers."

It wouldn't make much sense for autoworkers to go on strike at this point, given the near-death state of the industry. And the industry is a much less important element of the economy than it used to be. Nevertheless, the travails of GM and Chrysler wouldn't be making headlines if they didn't still count for something.

Could the auto industry foil Gordon's indicator today just like it did in 1970?

Never say never, but I actually doubt it. There is too much other evidence that the worst is over for this economy. I continue to believe that the only truly profound problem facing the economy has been the banking crisis, and all the evidence is that it has now passed. The government's "stress tests" of the banking system have identified the weak ones, and there is a coherent plan to bolster them.

This is confirmed by evidence from the most risk-sensitive markets. The global markets for credit default swaps -- what amount to insurance policies on risk in financial instruments of all kinds, from commercial real estate to emerging markets -- have recovered profoundly from the panic lows of two months ago.

I still think that the recovery from this recession will be slow and painful. The economy is going to have to fight the headwinds of the enormous government debt that has been loaded on to deal with the recession, and with the higher taxes and inflation that will flow from that.

May 21 (Bloomberg) -- Stocks and Treasuries fell, and the dollar dropped to a four-month low on speculation the U.S. government’s creditworthiness is deteriorating.

U.S. stocks declined for a third day, extending a global slump, after jobless claims topped economists’ forecasts and Standard & Poor’s said the U.K. may lose its AAA credit rating. Treasury Secretary Timothy Geithner said after the markets closed that the Obama administration is committed to reducing the budget deficit amid concerns about creditworthiness.

“The markets are beginning to anticipate the possibility of” a downgrade to the U.S.’s top AAA credit rating, and it will “eventually” be lost, said Bill Gross, co-chief investment officer of Pacific Investment Management Co. in Newport Beach, California, in a Bloomberg Television interview. “It’s certainly nothing that’s going to happen overnight.”

...

The dollar declined to the lowest level against the euro since January and dropped versus the yen as an increase in Treasury yields and gold prices indicated inflation may accelerate while the U.S. budget deficit widens.

Debt Spread

The spread between yields on 10-year notes and Treasury Inflation Protected Securities, reflecting the outlook among traders for consumer prices, reached 1.73 percentage points, the highest level since September. Sterling erased its decline versus the dollar on speculation a credit downgrade from Standard & Poor’s wasn’t imminent and two other rating companies affirmed the U.K.’s “stable” outlook.

The dollar slid 0.9 percent to $1.3901 per euro at 4:02 p.m. in New York, from $1.3780 yesterday. It touched $1.3923, the weakest level since Jan. 5. The dollar fell 0.6 percent to 94.31 yen from 94.88 and reached 93.97, the lowest since March 19. The euro increased 0.3 percent to 131.93 yen from 130.77.

Treasuries dropped after the Federal Reserve bought a smaller percentage of debt than some expected at today’s purchase operation and traders shifted focus to the three note sales next week.

Note Yields

Yields on 10-year notes rose the most since May 7 as the Treasury announced it would auction $101 billion in two-, five- and seven-year notes next week. The central bank bought $7.398 billion, or 16 percent, of the $45.694 billion in U.S. debt due in 2013 to 2016 offered by dealers for consideration. A gauge of inflation reached the highest level since September.

The yield on the 10-year note rose 15 basis points, or 0.15 percentage point, to 3.35 percent at 2:50 p.m. in New York, according to BGCantor Market Data. The 3.125 percent security due May 2019 fell 1 7/32, or $2.19 per $1,000 face amount, to 98 3/32.

The difference between two- and 10-year Treasuries rose 0.15 percentage point to 2.50 percentage points today, the steepest the so-called yield curve has been since Nov. 14.

Gold rose to the highest price since March as the slump in global equity markets increased the appeal of precious metals as an alternative investment. Silver touched the highest since February.

In the case of Ford Pinto, Ford should probably be fined (and bigtime) by not having disclosed information. Or pay reparation in cases of accidentes were it is proved that people were injured or killed because of flawed equipment. Sure..I´m all for it. The thing is, as Friedman points out, you have to argue de principle behind it. Think about life insurance. How much of a premium are you willing to pay?? Many people don´t even have life insurance by choice. Does that mean they don´t value life?? Corporations should be liable to all parties involved in their activities and they should be obliged to release relevant informantion or suffer the consequences... no argue there. Government regulations can deal with some of the problems? True, absolutely. But take thsi example... nowadays, at least in Europe, all cars must have ABS and dirver airbags. That makes them safer cars sure. But that only came up after almost all the automakers had those features in their cars (even the cheapest ones). If for example.. they had imposed those features since those systems appeard in the market more than 20 years ago... car prices would have gone up a lot because the systems were too expensive to put in other than luxuy cars. Many people would have been denied the privelege of owning a car, if cars were a bit safer in general. Not saying governments can help improve some situations... but the road of having the government to decide everything is a dangerous one.